REGIONAL CONNECTIVITY SCHEME (RCS)-UDAN (UDE DESH KA AAM NAGRIK)

ABOUT: The Regional Connectivity Scheme, UDAN (Ude Desk Ka Aam Nagrik) launched in 2016 was conceptualized by the Ministry of Civil Aviation (MoCA) to promote regional air connectivity by making flying affordable for the common populace. The idea was to put small-town India on the aviation map by encouraging airlines to operate flights on regional routes. UDAN is a first-of-its-kind scheme globally, designed to jump-start the regional aviation market by improving the viability of unserved regional routes through a market-based mechanism.

OBJECTIVES:

• • Facilitate/stimulate regional air connectivity by making it affordable by supporting airline operation.
  • To provide connectivity to un-served and under-served regions in tier I and tier II cities through revival of existing air strips and airports.

SALIENT FEATURES:

• • It is a central sector scheme.
  • Tenure: 10 years
  • Implementing Agency: Airport Authority of India (AAI).
  • The scheme operates at three levels to ensure sustainability of regional routes:
    • Reducing operating costs pertaining to operating flights on regional routes,
    • Providing a market discovered subsidy for some of the seats deployed on these routes,
    • Providing a three-year exclusivity period.
  • Fair is fixed at Rs.2500 for a one-hour journey by a fixed wing aircraft or half an hour journey by a helicopter for about 500km.
  • Airlines are mandated to provide 50% seats at subsidised rates.
  • Limited government support: The objectives of the Scheme were envisioned to be achieved via monetary (Viability Gap Funding (VGF)) and non-monetary benefits provided to the airline operators.
  • Cooperative Federalism – State-level coordination committees were constituted to extend various concessions and benefits to airline operators under the Scheme and to monitor airport infrastructure development.
  • Continuous Modifications / Course Corrections: While UDAN was formulated with a first-of-its-kind working model to begin with; the true innovation of RCS-UDAN lies in its ability to dynamically transform itself in a changing market scenario to ensure that it remains amenable to its original objectives. Over the years, depending upon priorities of the government, stakeholder feedback as well as market response and participation patterns, there have been a number of additions/ modifications in the UDAN scheme in order to facilitate the growth of the aviation sector in a targeted manner.

BENEFITS:

• • Commercializing the un-served and under-served airports will “perational” publicly-owned sites which have hitherto been reserved for elite use. An average citizen would get a participative stake in their use and development.
  • Since UDAN is branded as a new passenger facility, an additional business opportunity is the potential for moving existing perishable cargo, fragile goods and high-value export-oriented products by air. It is only a combination of passengers and cargo which can make the scheme sustainable. Public investments should be leveraged via private management model used for major airports.
  • The multiplier effect in terms of additional economic value and jobs are from developing these airports as growth centres. Providing secure and high-quality road links, 24×7 electricity, clean water and sanitation are key for private management to step in with malls, air-conditioned warehouses, hotels and new businesses which need secure air connectivity.

CHALLENGES:

• • Lack of technical infrastructure like the aircraft has to go to the interiors, lack of airports, lack of equipment, technical manpower etc. Mostly, these areday airports without night training facility. If this is included, the costs would be very high and runways have to be improved as well.
  • The overhead cost for a small aircraft is almost same as that of bigger aircrafts. Therefore,low cost operations might not ensure much profit for big airlines.
  • Ghost airports are technically operational but do not handle a single scheduled flight.
  • Sustainability problem as only 45.6 percent of all “perationalized routes” awarded under the scheme are still serviceable. 228 routes have been stopped by airlines due to lack of infrastructure, low passenger demand, the shutdown of airlines.
  • No benefit of cheaper tickets seen by passengers, and lack of awareness about the UDAN scheme amongst passengers looking to book flights. As a result, only 5 lakh passengers took to the air under the RCS-UDAN scheme.
  • Lack of participation by private airlines- Flights operated under the UDAN scheme have fallen by nearly 25 percent in the last year, as private airlines are deploying their capacity on more profitable routes.
  • Viability Gap Funding (VGF) issue:
    • The CAG noted that due to lack of guidelines to regulate collection of RCF and disbursement of VGF to airlines for underwriting seats on flights mounted on commercially non-viable routes. Left unchecked, scheduled airlines continued to collect higher fares from passengers and also delayed paying their share of RCF.
    • Flaws in self-certification of the VGF claims by Scheduled Commuter Airlines (SCA), the CAG illustrated how Alliance Air (once a part of the Air India Group) claimed excess VGF of nearly Rs 31 crore by under-allocating the required number of Regional Connectivity Scheme(RCS) seats on its aircraft on UDAN routes. Alliance Air also charged nearly Rs 49 lakh as excess fare from passengers.

WAY FORWARD:

• • Investments have to be attracted here from new and local investors to
  • Ghost airports have to be connected with short haul aircrafts along with development of low-cost airports with reasonable expenditure.
  • Cost benefit analysis based on seating capacity to decide the suitable aircraft for regional connectivity.
  • Establish a mechanism to monitor the spending by regional airports.
  • Government needs to establish proper regulatory mechanism for VGF payment to SCAs along with monitoring the collection and payment of RCF levy by scheduled airlines.
  • Increasing awareness among citizens and establishing a grievance redressal mechanism.

OTHER INITIATIVES